Developers amended plans to create a pend - an archway through the building
Developers are to receive planning permission for a £300m scheme in Edinburgh after Scottish ministers chose not to stand in their way.
Caltongate complex in the historic heart of the capital will now go ahead after Scottish ministers, who had the final decision, cleared the proposals.
It means there will not be a public inquiry and Edinburgh City Council is free to issue planning permission.
The plan includes a luxury hotel, an office complex and 200 homes.
The upper floors, chimney stacks and internal partitions of the building at 221-223 Canongate will remain, with housing on three floors.
The overall height of the pend, the passageway which passes through the building, will also be reduced by about 30 centimetres, and will be finished in natural stone, rather than white concrete - which had drawn criticism.
A Scottish Government spokesman, said: "Scottish ministers do not consider it necessary to take over the decision-making role from Edinburgh City Council for the range of applications associated with the Caltongate development project.
"We have therefore cleared the applications back to the council to determine as they see fit."
Jenny Dawe, Edinburgh City Council leader, said: "The Caltongate development will play a huge part in securing the economic, social and cultural life of the city centre and I am pleased that we can now take this matter forward."
Alan Henderson, Edinburgh City Council's head of planning and strategy, said: "We accept the decision of Scottish ministers, and will take into consideration any additional comments they have made.
"We will now conclude legal agreements in relation to the development and will issue planning permission to the developer in due course."
Graham Birse, Edinburgh Chamber of Commerce's deputy chief executive, said: "This has been a long haul, but at last ministers have endorsed the sensible decision taken by Edinburgh councillors to re-vitalise a run-down area of the Old Town with a quality development that will bring with it jobs and prosperity to Edinburgh city centre."